RESTRUCTURING CHARGES

6 Months Ended

Jul. 01, 2012

NOTE 4 – RESTRUCTURING CHARGES

All costs related to the restructuring plans below are included in restructuring and other exit costs in the accompanying Consolidated Statements of Income.

2011 Plans

At the end of 2011, approximately 60 percent of our revenues came from legacy products, which are generally transactional documents, labels, and other printed materials that are in a state of transition to digital technologies or are being rapidly commoditized given the excess capacity in the printing industry. Our growth comes from core solutions, which are a suite of product and service solutions designed to assist our customers in meeting their strategic business needs. In late 2011, we developed a strategic restructuring program that was announced in January 2012. The restructuring is a two-year program designed to better align our resources in support of our growing core solutions business and to reduce costs to offset the impact of declining revenue from our legacy products.

We increased our original estimate of the total costs of the restructuring program due to planned infrastructure changes, information technology initiatives, and additional third-party assistance with developing the restructuring program, all of which have been approved. Certain restructuring activities are not yet identified and the associated costs are not included in our estimate at this time. The actual costs are expected to be incurred through 2013 and could change as details of the program are identified and approved.

Other associated exit costs primarily include our estimate of fees to a third party to assist with the program implementation, costs for the relocation of equipment and inventory, and certain costs related to implementation of an ERP system that will replace select software applications.

Components of restructuring and other exit costs consist of the following:

	Total		2012		Cumulative
	Expected		Year-To-Date		To-Date
	Costs		Expense		Expense
Employee separation costs	$	5,500	$	-	$	5,480
Contract termination costs		2,000		73		73
Other associated exit costs		4,000		2,500		2,500
Total	$	11,500	$	2,573	$	8,053

A summary of the accrual activity is as follows:

	Balance		Accrued		Incurred			Balance
	2011		in 2012		in 2012			2012
Employee separation costs	$	5,480	$	-	$	(2,228	)	$	3,252
Other associated exit costs		-		1,665		(291	)		1,374
Total	$	5,480	$	1,665	$	(2,519	)	$	4,626

2009 Plans

Restructuring and other exit costs incurred in 2012 and 2011 relate to certain contract termination and equipment removal costs that are required to be expensed as incurred and, in 2011, include a reversal of $325 for lower than expected employee separation costs.

A summary of the accrual activity is as follows:

	Balance		Accrued		Incurred			Balance
	2011		in 2012		in 2012			2012
Contract termination costs	$	180	$	6	$	(186	)	$	-
Total	$	180	$	6	$	(186	)	$	-

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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